Lufthansa closes on A380 deal
JULIAN MOXON AND ANDREW
DOYLE/TOULOUSE
RAMON LOPEZ/WASHINGTON DC
LUFTHANSA IS preparing to add its name to the Airbus
A3 80 customer list following the
19 December decision by the
manufacturer's supervisory board
to industrially launch the airliner
formally known as the A3 XX.
The launch is meanwhile set to
spark a trade war with the USA
unless the aircraft's backers can
convince Washington that devel
opment is not illegally subsidised.
The German flag-carrier is
understood to be looking at order
ing a mix of A3 80 passenger and
freighter versions and industry
sources say a deal could be finalised
during the first quarter.
"We see a need for a large
aircraft from roughly 2007-2008
which could be used for daily
flights from Frankfurt to New
Delhi, New York, Tokyo and
Singapore," says Lufthansa, adding
that it is still studying Boeing's pro
posed 747X development.
"We do have time," the airline
says. "We are such a good customer
of Airbus and Boeing that we do
not have to cling to a certain date
for launch customer discounts."
The A3 80 could be heading for a turbulant ride amid a US/EUfunding row
Prompted by Boeing the
Clinton Administration has been
threatening action over A3 80 gov
ernment launch aid for several
months as the four Airbus govern
ments of France,Germany, the UK
and Spain committed to providing
reimburseable advances for €2.3
billion ($2.14 billion) of the $10.7
billion development costs, to be
repaid over 17 years.
Tension over a potential dispute
was heightened just 24 hours prior
to launch approval with President
Clinton raising die issue at a US-
EU economic summit held in
Washington. He warned the EU
that a trade fight could erupt over
European ''subsidies" for aircraft
development.
The USA could file a complaint
against the EU with the World
Trade Organisation (WTO) if the
four nations proceed with their
finance plans. Boeing says the deal
includes debt forgiveness and
below-market interest rates on
government loans, violating a 1992
US-EU agreement on aircraft
subsidies, and a 1994 WTO sub
sidy code requiring loans be made
on a commercial basis.
The European Commission
(EC) rejects "completely" the US
administration's criticism of the
loan conditions, saying that the
government funding is in the form
of repayable loans, not subsidies. It
insists that the funding "conforms
to the 1992 agreement on subsidies
to the aeronautics industry. If the
USA decides to initiate a procedure
against the European Union, the
Commission will not hesitate to
propose that the Council of Minis
ters take in response similar mea
sures against the indirect subsidies
which benefit Boeing through its
contracts with NASA and the
Pentagon".
The EC says, however, that the
incoming Bush Administration
will have to take account of the
22,000 employees in the US equip
ment industry that will benefit
from the A3 80 programme. Airbus
chief executive Noel Forgeard says
"We are in strict compliance" with
the 1992 agreement, which allows
3 3 % of direct subsidy and up to 4%
of indirect.
Deputy US Trade Represent
ative, Susan Esserman has had
preliminary and "cordial" talks
with senior EU trade official Peter
Carl during the recent summit.
She formally raised the issue with
the USA and EU, agreeing to
resume talks on 11 January. Esser
man says that "the terms of the gov
ernment financing are not set yet,
which is all the more reason to dis
cuss the issue now, given its impor
tance. We need to resolve it to
avoid a problem." •
Airbus tries new marketing approach with A380 designations
THE FULL go-ahead for the A3 80 passenger model, with
the backing of commitments
from six customers for 48 orders,
sees the 555-seat passenger ver
sion designated the A3 80-800. A
formal go-ahead for the -800F
cargo variant, for which Emirates
has placed two firm commit
ments (of its seven), has been
delayed until the firm orderbook
can be increased to 10-15 aircraft.
Airbus expects to sign at least two
more A380F customers "during
the next few weeks".
Airbus chief executive Noel
Forgeard says the A3 80 designa
tor was chosen after a "long
debate" as the "8 suggests double-
decks, one on top of the other".
Other planned members of the
A3 80 family include a 656-seat
stretch and 480-seat reduced
capacity version, to be known
respectively as the A3 80-900 and
-700. A longer-range version of
the basic variant will be the
-800R. Airbus says these will be
launched when it identifies suffi
cient market demand.
The -700/800/900 suffixes
reflect a first-time commitment
to airlines that the three models
will be "fully developed aircraft"
atservice-entryandnotsubjectto
the introduction of incremental
performance enhancements
which previously saw the initial
version become quickly dated.
"We have done this in order not
to affect residual values," says
Airbus chief commercial officer,
John Leahy.
EADS co-chairman Manfred
Bischoff believes there is a market
for750A380sinthenext 15years.
"We expect to break even at 2 50,
and to see a return in 2011".
Most, if not all, of the present
50 firm A3 80 commitments are
expected to be converted to the
firm orders backlog in the next
few weeks. Launch customers are
Emirates, Air France, ILFC,
Singapore Airlines (SIA), Qantas
and Virgin, which have benefited
from a 3 0% discount on the A3 80
catalogue price of $230 million.
Philippe Jarry, vice-president,
development, large commercial
aircraft, says "there are some
more [launch customers] in the
pipeline whom we've made pro
posals to who are ready to sign in
January". He adds: "We'll proba
bly say OK to them as well - its in
the business case."
The A3 80 is scheduled to make
its maiden flight during the
fourth quarter of 2004, and enter
service with SIA in March 2006.
The Rolls-Royce Trent 900,
already selected by SIA, Virgin
and ILFC, will be the lead certifi
cation engine. It will be followed
by the rival Pratt & Whitney-
General Electric Engine Alliance
GP7200. The freighter is due to
enter service in 2008. •
See A3 80 cutaway P66
FLIGHT INTERNATIONAL 2 - 8 January 2001 15